Deutsche Bank Sides With Goldman Betting on Turkey Bank Drop

By Sibel Akbay -
Feb 14, 2013

Deutsche Bank AG and Goldman Sachs
Group Inc. say a record rally in Turkish banks may turn into a
sell-off on rising concern that earnings will be hit by plans to
reduce fee income and pare growth in loans.

Industrial companies in Turkey are a better bet because
they offer higher dividends, Albert Krespin, chief executive
officer of Deutsche Bank’s broker in the country, said in an
interview in Istanbul. Goldman Sachs advised clients to exit
Turkish lenders last week, saying earnings will come under
pressure.

“Banking shares already started seeing a correction and I
would expect that to continue in the near-term,” Krespin said
at his offices on Feb. 12. “Given this scenario, we maintain
our recommendation to switch from banking shares to industry.”

The ISE National Banks index lost as much as 2.1 percent to
156,658.73 today, dropping below its 100-day moving average, a
technical gauge of future price movements used by traders, for
the first time since June last year. It headed for the fourth
week of falls, the longest losing streak since May.

The banking regulator is giving its views on the draft law
“to the necessary authorities,” chief regulator Mukim Oztekin
said at a news conference in Ankara yesterday. The law, also
designed to bring consumer rights in line with European Union
norms, is with the trade ministry, he said.

U.S. Cash

Goldman Sachs turned negative on Turkey’s banks last week,
saying repatriation of money into the U.S. could threaten
economic stability in the country, adding to concern about a
decline in profits.

Turkish Central Bank Governor Erdem Basci has started
focusing monetary policy on limiting loan growth to an annual 15
percent this year. He said the curbs are needed to narrow the
import-driven current-account deficit, which had threatened to
destabilize the economy last year.

Interest Margins

Banks will have a positive 2013 even though there are
short-term risks, said Ovunc Gursoy, an analyst at Yapi Kredi
Yatirim Menkul Degerler, an Istanbul-based broker also owned by
UniCredit.

“There’s a good, stable trend in net interest margins,”
he said in a telephone interview today. “I would expect that to
continue until at least the third quarter this year.”

Gursoy said investors were nervous about a probe by the
antitrust board in Ankara into whether 12 Turkish banks,
including Garanti and Akbank TAS, colluded to set interest
rates. A final hearing is scheduled for Feb. 25 and a decision
is expected within 15 days after that.

The banking index has a total market value of 61.7 billion
liras, 42 percent of the ISE National 100, according to data
compiled by Bloomberg. Garanti is the biggest bank followed by
Akbank, part-owned by Citigroup Inc., and Turkiye Is Bankasi AS.

Industrial Firms

Five of 30 analysts currently recommend buying shares in
Garanti compared with 16 of 33 analysts a year ago, according to
data compiled by Bloomberg. Six of 29 analysts say buy Akbank
shares. The two firms have a combined 52 percent weighting in
the banking index.

“Companies like Tupras have been giving out good dividends
and that’s very important in a low-interest rate environment
such as this,” he said.

Ten of 32 analysts recommend buying Tupras, according to
data compiled by Bloomberg. Tupras paid a dividend of 3.93 liras
a share last year and 2.98 liras in 2011. The shares lost 1
percent to 48.30 liras today.